{"id":589,"date":"2010-05-24T14:51:54","date_gmt":"2010-05-24T14:51:54","guid":{"rendered":"https:\/\/www.bfvlaw.com\/eleventh-circuit-reverses-district-court-on-grounds-that-restrictive-covenants\/"},"modified":"2010-05-24T14:51:54","modified_gmt":"2010-05-24T14:51:54","slug":"eleventh-circuit-reverses-district-court-on-grounds-that-restrictive-covenants","status":"publish","type":"post","link":"https:\/\/www.bfvlaw.com\/eleventh-circuit-reverses-district-court-on-grounds-that-restrictive-covenants\/","title":{"rendered":"Eleventh Circuit Reverses District Court on Grounds that Restrictive  Covenants Should Have Been Scrutinized as Ancillary  to the Sale of a Business"},"content":{"rendered":"<p>In <em>Mohr v. Bank of New York Mellon Corporation<\/em>, No. 09-15813, 2010 WL 1063856 (11th Cir. March 24, 2010), the United States Court of Appeals for the Eleventh Circuit reversed a preliminary injunction entered by the District Court which enjoined enforcement of the restrictive covenants in the individuals\u2019 employment agreements.\u00a0 The individuals, Michael Mohr and Jack Sawyer, Jr., had sold their investment management business to a subsidiary of the company.\u00a0 They executed an asset purchase agreement and also signed separate employment agreements in connection with the sale.<\/p>\n<p>Following the merger of the company with Bank of New York, the individuals resigned from their employment and accepted employment with a competitor.\u00a0 After the individuals received a letter concerning their obligations under the restrictive covenants from the company\u2019s general counsel, they filed an action in the United States District Court for the Northern District of Georgia seeking a declaratory judgment that their restrictive covenants were unenforceable under Georgia law.\u00a0 They also sought an injunction precluding the company from enforcing the covenants.\u00a0 The company filed a cross-motion seeking a temporary restraining order enjoining the individuals from violating their restrictive covenants.<\/p>\n<p>The District Court found that the restrictive covenants in the individuals\u2019 employment agreements, which were signed contemporaneously with the asset purchase agreement for the sale of their business, became ancillary to their employment after they became employees-at-will.\u00a0 The District Court therefore subjected the restrictive covenants to strict scrutiny rather than the lesser scrutiny applicable to restrictive covenants entered into ancillary to the sale of the business.\u00a0 Applying strict scrutiny, the District Court found that the covenants were overly broad and unenforceable.\u00a0 The District Court therefore entered a preliminary injunction against the company enjoining enforcement of the covenants.<\/p>\n<p>On appeal, the Eleventh Circuit Court of Appeals held that the restrictive covenants should be treated as ancillary to the sale of the business, because the individuals had equal bargaining power with the company and because they received compensation from the company in the sale for their willingness to abide by the restrictive covenants.\u00a0 As such, the covenants were subject to lesser scrutiny.\u00a0 However, because the District Court had ruled that the covenants would be overly broad even under a lesser level of scrutiny, the Eleventh Circuit remanded the case for the District Court to determine whether it could blue pencil the restrictive covenants, given that Georgia law permits courts to blue pencil objectionable portions of restrictive covenants ancillary to the sale of a business.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>In Mohr v. Bank of New York Mellon Corporation, No. 09-15813, 2010 WL 1063856 (11th Cir. March 24, 2010), the United States Court of Appeals for the Eleventh Circuit reversed a preliminary injunction entered by the District Court which enjoined enforcement of the restrictive covenants in the individuals\u2019 employment agreements.\u00a0 The individuals, Michael Mohr and [&hellip;]<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_mo_disable_npp":"","_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[4,9],"tags":[25,16,64],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v22.5 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Eleventh Circuit Reverses District Court on Grounds that Restrictive Covenants Should Have Been Scrutinized as Ancillary to the Sale of a Business<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.bfvlaw.com\/eleventh-circuit-reverses-district-court-on-grounds-that-restrictive-covenants\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Eleventh Circuit Reverses District Court on Grounds that Restrictive Covenants Should Have Been Scrutinized as Ancillary to the Sale of a Business\" \/>\n<meta property=\"og:description\" content=\"In Mohr v. Bank of New York Mellon Corporation, No. 09-15813, 2010 WL 1063856 (11th Cir. 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